First Bank Financial Centre
March 15, 2004
Robert E.
Feldman, Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Dear Mr. Feldman
As a community banker, I strongly endorse the federal bank regulators'
proposal to increase the asset size of banks eligible for the small
bank
streamlined Community Reinvestment Act (CRA) examination from $250
million
to $500 million and elimination of the holding company size limit
(currently $1 billion). This proposal will greatly reduce regulatory
burden. I am the President of First Bank Financial Centre,
a $327,000,000
asset size bank located in Oconomowoc, Wisconsin.
The small bank CRA examination process was
an excellent innovation.
As a community banker, I applaud the agencies for
recognizing that it is time
to expand this critical burden reduction benefit to larger community
banks. At this critical time for the economy, this will allow more
community banks to focus on what they do best-fueling America's local
economies. When a bank must comply with the requirements of the large
bank CRA evaluation process, the costs and burdens increase dramatically.
In addition, to costs devoted to CRA compliance our concern is
the impact
of personnel and time to address the requirements of CRA. We have
appointed
an active mortgage lender to the manager position drawing him away
for time
previously committed to assisting our clients with home purchases
and
improvements. His duties also bring staff training to key managers
of our bank,
impacting their time.
Adjusting
the asset size limit also more accurately reflects significant
changes
and consolidation within the banking industry in the last
10
years. To be fair,
banks should be evaluated against their peers,
not
banks hundreds of time their size.
The proposed change recognizes
that
it's not right to assess the CRA performance
of a $500 million
bank or a
$1 billion bank with the same exam procedures used for
a $500
billion
bank. Large banks now stretch from coast-to-coast with assets
in the
hundreds of billions of dollars. It is not fair to rate a community
bank
using the same CRA examination. And, while the proposed increase
is a
good first step, the size of banks eligible for the small-bank
streamlined
CRA examination should be increased to $2 billion, or at a minimum,
$1
billion.
Ironically, community activists seem oblivious to the costs and
burdens.
And yet, they object to bank mergers that remove the local bank from
the
community. This is contradictory. If community groups want to keep
the
local banks in the community where they have better access to
decision-makers, they must recognize that regulatory burdens are
strangling smaller institutions and forcing them to consider selling
to
larger institutions that can better manage the burdens.
Increasing the size of banks eligible for the small-bank streamlined
CRA
examination does not relieve banks from CRA responsibilities. Since
the
survival of many community banks is closely intertwined with the
success
and viability of their communities, the increase will merely eliminate
some of the most burdensome requirements.
In summary, I believe that increasing the asset-size of banks eligible
for
the small bank streamlined CRA examination process is an important
first
step to reducing regulatory burden. I also support eliminating the
separate holding company qualification for the streamlined examination,
since it places small community banks that are part of a larger holding
company at a disadvantage to their peers. While community banks still
must comply with the general requirements of CRA, this change will
eliminate some of the most problematic and burdensome elements of
the
current CRA regulation from community banks that are drowning in
regulatory red-tape. I also urge the agencies to seriously consider
raising
the size of banks eligible for the streamlined examination $2 billion
or, at
least, $1 billion in assets to better reflect the current demographics
of the banking
industry.
Sincerely
Malcolm A. Dorn
President
First Bank Financial Centre
Oconomowoc, WI
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